Tiger Brands reaches settlement with the Competition Commission

Nick Dennis, the company's CEO, said upon receipt, in February, of the Commission's referral to the Competition Tribunal of a case against Tiger Brands in the bread industry in the Western Cape, the company immediately undertook to co-operate; and instituted a wider, national, independent investigation into its milling and baking operations.

“We took extremely seriously the allegations levelled against us as they ran counter to the ethical standards for which we are known and respected. We immediately instituted an independent investigation into the matter and commissioned Edward Nathan Sonnenbergs Inc. to conduct the investigation at an arms-length from the company. Edward Nathan Sonnebergs, in turn appointed forensic auditors from KPMG and economic experts, Econometrix.”

During this process several company employees voluntarily agreed to co-operate with the Edward Nathan Sonnenbergs Inc. investigation. This investigation found evidence of meetings between certain company employees and some competitors that amounted to anti-competitive activity.

Edward Nathan Sonnenbergs Inc. tasked Econometrix to probe whether there was any evidence of abnormal pricing of bread and maize meal and whether consumers might have been adversely affected by any anti-competitive activity.

No evidence

The Econometrix investigations found no evidence of abnormal pricing; nor were consumers adversely affected.

Tiger Brands shared these findings with the Competition Commission.

As a result of the company's national investigation into its baking and milling businesses and co-operation with the Commission's investigation into these industries, the company has been granted corporate leniency in respect of all activities in its milling business. The milling industry is the subject of a separate, but related, investigation by the Commission. Tiger Brands has been granted immunity in respect of these matters, conditional upon the company assisting the Commission in its further investigations into the milling industry.

“The anti-competitive activity was entirely unacceptable and contrary to our high standards of corporate governance. We undertook to co-operate fully with the Commission. The company has taken full responsibility for the actions of certain of its employees. It is extremely disappointing that this has happened, but we are satisfied that this has resulted in a resolution of the matter,” said Dennis.

Dennis said the company was taking appropriate disciplinary action against the employees involved.

“We do not tolerate anti-competitive behaviour in any of our businesses. It is deeply regrettable that this has occurred.”

Following the announcement of the fine, which according to the Competition Commission represents 5.7% of Tiger Brands' bread sales last year, the company's share price fell 1.2% to R179 yesterday.